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BrokerS - and some are better than others!

I agree about the options (I think it looks like Matt has done all he can to ensure anyone can do what they want, but reasons I’m devastated:

1. I invested in the whole. I wanted it to stay whole. I’m a LTH and would have happily held another few years funding Ingenuity.

2. If other holders were less happy with that situation there were ways to address that differently, in my opinion. Most obvious being to de-merge and list Ingenuity elsewhere with THG retaining the lions share of the shares but new equity issued to raise the cash needed to invest. That = no ongoing funding requirement for RemainCo but THG benefitting from future Ingenuity upside.

3. I’d like to stay invested to benefit from what I see as quite substantial upside for Ingenuity but that now requires a liquidity lock up for me, plus uncertainty (as things stand) at what the long term plan is for that business + new leadership team, when it was all unnecessary in my view.

4. My holdings are not straightforward, held across ISA’s and trading accounts so it’s a bit of a nightmare for me to wade through now and sort it all out. And I’m guessing remaining invested in an ISA might not be possible at all?

Long day and just logged on to see the news.

My reading is £75m raise, then Ingenuity gets hived off at at £100m valuation so technically we’ll probably see a small reduction in the shares for the remainder?

They also closed the offer very quickly, meaning they had the money lined up before, basically?

I’m guessing shorts will have to close if owned by someone who wants to partake in all this? Ie transfer shares in to Ingenuity or get additional shares in RemainCo?

Overall, devastated. Not sure any of this was really necessary. I’d much rather they kept it whole and pared back ingenuity capex for a while, but think it might have a positive effect on the SP.

Great news, I love the whole pop up concept, although four is pretty insignificant and they’re mobile, not fixed for the key trading period.

Have never really understood why we don’t do pop ups in the big shopping centres over Oct-Dec. They all have vacant units and LF is a great brand that I’m sure landlords would be willing to provide flexible terms to.

I said on here yesterday that the strategy (main listing, de-merging Ingenuity) seems a sensible one. We don’t know the detail but it probably is if that’s what the key IIs are pushing for, if we assume we’re all on the same side here.

Thinking about it more though, as a LTH who was genuinely sold on the company as the “whole group”, of which Ingenuity was a big part, it’s also very disappointing. Particularly if the Sky journalist is right that it’s going in to private ownership.

Obviously we don’t know the details yet of any proposal, but I think there are two options that I’d much prefer:

1. We list Ingenuity in the US with its own banking facilities. THG retain the lions share, say 80%, with the 20% a capital raise to provide the funding needed to get Ingenuity to cash generation. With a stated intention that THG reduce holdings on the open market over a given period so that they don’t have a controlling stake (if that is necessary for US investors, they seem far less bothered about these things), with proceeds used to buy back THG shares or pay a dividend. That would see the Ingenuity cash drain disappear over night, it would see an immediate re-rating of the THG stock as the US properly values Ingenuity, a small free float in the US to give upward momentum… and allow us all to benefit from any future up side. Win:win.

2. If we’re generating ~£100m pa cash and Ingenuity only needs £150m, that feels like we’re 18 months away (6 of which will have passed by the time we do it anyway), or if the 4yr timeframe is more accurate it means that we won’t need to be spending all cash on Ingenuity over that period anyway, leaving surplus cash for debt pay down, share buy backs, divi’s anyway. So just hold it and show us what that 4 year plan looks like, how much Capex it needed, when and what it’d return… then we’d likely see a rerate anyway. One option here was surely to dial back capex further and deliver it over a longer period - say 5 to 6 years? I’m not actually clear on why £150m is needed with all fulfilment centres live anyway?

Anyway, I hope at some point we get full transparency on what options/structures were considered and why this is best!

Investing101,

I very much doubt he regrets it because he didn’t want to lose control and he thinks the whole group is worth a lot more than the £2.50 they were rumoured to be offering for the whole.

The interesting point is that he said they came back with another offer that valued ingenuity alone at a premium to the SP and I think we were ~65p then. Maybe he’s gone back to them and said he’d accept that now? Or maybe he’s convinced QIA to match it.

You have to assume that if someone pays more than the current SP for the seemingly least favoured part of the business (by the market) then we’d see a significant rerate.

But wtfdik.

Likewise, ordered Monday afternoon, with me first thing Tuesday morning. Really, really impressive.

My order was £87 and I was quite happy to pay that but got a discount at the till to £70. Part of me thinks they discount too much but I don’t know the market I suppose, and I’m not the most price sensitive person.

@yiab,

How do we “know some of the 65% want out”?

I’ve heard that said a few times. Something I missed yesterday?

I think if that were true it opens up bids for the whole group. Moulding still holds the keys to the car but if a few wanted out it would change the dynamic a bit for full t/o offers?

From what I heard at the end they remain very supportive.

An absolutely staggering response to what I thought was pretty decent results.

I could understand this if overall revenue was down, or they were going to miss estimates (being at the “lower end” of guidance is still in guidance) and they’d big em us no indication of strategy - which they did and it seems a very sensible one.

While I don’t really take much notice of analyst notes, so far the consensus has been roundly positive about how much value it could unlock for investors, yet we’re going down.

I honestly thought that strategy update would trump everything in the results.

If the last trading day and a bit has taught me anything it’s that I do not understand the markets at all.

Has anyone seen the Muller products in anywhere other than Morrisons?

Don’t have one near me. I went in to an ASDA today for some but couldn’t find them :(

Ammu123 - with the ASOS SP at 440p it’s hard to give any credit to their management either, and I hold them too!

1P,

Thanks for the reply. Good to have some debate amongst the nonsense.

Just on your Yen point, I’m glad the analyst asked that question because it was on my mind. I didn’t really understand MM’s answer. I get that local manufacturing is a positive at any time, but it also figures that if you neutralise currency fluctuations in doing so, how does it become a tailwind for FY25? If anyone can explain that to me in simple language, it’d be appreciated.

I also agree that the market will likely switch back in favour of the exact type of business we’re proposing to sell. For that reason a listing elsewhere would be preferable to me than going private.

I am somewhat worried we get shafted with the de-merger whereby it’s given away to existing II’s for a pittance. Hopefully MM’s words on the Apollo takeover here provide a floor.

What would be better is if anyone that’s been running the slide rule over THG now sees this as the time to put forward offers.

It’s reasonable to say this strategy update may have been rushed given lacklustre numbers (I think they’re okay, personally); it doesn’t feel as though it was all ready to announce but equally they’ve run out of road on the listing piece. But a very reasonable scenario is that now gives other players a bit of time to formulate their offers and get them tabled.

Is it worth demerging Ingenuity?

So much cash has been pumped in to this, for another £150m is it really worth separating now? I’d imagine that looks something like £70m - £50m - £30m funding needed over 3 years which we could handle with some £ left over to fund small divi’s or buy backs.

Feels a bit like we’ve been asked to sit tight and watch the race till the final laps and then they’re black flagging it.

Like someone else is going to fund the final part and then take all the upside. So it better be a bloody good offer/special dividend from whoever’s planning to fund it.

I’ll likely stay in if I can (struggling to see how it all works), but one I have to wait and see on.

Yesimabeliever - The only real question is when the circular gets issued and what is says of course.

I think MM said: “we are well advised on that and will be issuing a circular with all the detail”. My guess is we’ll get that before end of September.

Magnum - ingenuity is the whole infrastructure used to fulfil orders. There’s already contracts in place and they will remain after separation.

MM said in the call a circular would detail the balance sheet of the new companies. It sounds like this might be more imminent than I thought.

He also said they won’t be “forcing anyone not to participate” which hopefully (for me) means I can keep some shares in Ingenuity as it’s a big part of the reason I invested.

In terms of funding he said the £150m needed to get ingenuity to cash flow neutral would be funded by banking facilities and “other sources” which I took to mean they have a backer lined up who is going to put some cash in. Maybe him, who knows.

My guess is they’re aiming for Ingenuity split early next year after peak trading period is over and potentially for year end so accounts are clean, then list the main listing for the remainder to come in March.

Anyone got any different takes?

You sound sooo desperate it’s embarrassing wildtiger

Stop wasting your time on here and get your short closed before it gets closed for you.

What they’ve announced today is sort of what I was alluding to yesterday, albeit I didn’t exp

This way we:

- Have clarity on strategy

- Shorts will likely exit now knowing a big payday could be around the corner any day for investors (providing rise)

- We then join the main index and get the tracker funds, etc further boosting that

- At some point, ideally after in my opinion, we demerge nutrition and get a pay day

- All of this in the context that we’ll end up as a dividend stock meaning income players will want in while we’re cheapest

- further options to demerge beauty and nutrition will remain on the table

You won’t be able to judge any market reaction on the results today OSG, they’ll be too busy reacting to clarification on strategy and the demerger.

Results will be completely masked by that, but if they weren’t, I’d imagine they’d focus on overall revenue growth and the forward looking guidance that Nutrition is now also in growth too.

Be a shame to sit on it and miss the ride OSG!